Sunday, August 5, 2012

Miami Beach Corruption Case Develops Over Information Leak

A burgeoning scandal threatens to derail the massive $1 billion redevelopment of the aging Miami Beach Convention Center. 

Previous accusations:  Several months ago, Miami Beach procurement director Gus Lopez was forced to resign over allegations that he was leaking confidential information on the selection process to a prospective developer for the project. Investigators turned up emails from Lopez to developer Walter Garcia revealing information on the project before it was released to other candidates as well as details not available to others. There are even some indications that the two were thinking of assembling their own team to propose on the project. 

Expanding controversy:  The scandal has recently grown to potentially enmesh top developer CMC Group, part of the team vying for the convention center project. The team, Portman-CMC, was the highest scoring developer rated by the evaluation committee. 

The concern centers on a payment of $25,000 from CMC to developer Garcia's company, Peninsula Development. CMC maintains that the payment was for talks and negotiation when Peninsula was being considered for a consulting role on the convention center proposal. 

Start over or forge ahead?  Even though CMC ultimately did not work with Peninsula on the project, some feel that the selection process has been tarnished to the point that it should be restarted completely. 

Commissioner Jonah Wolfson expressed the opinion that the allegations of misconduct are "reason to start the whole thing over." Others, however, are concerned about the implications of current proposals being public and how that would affect response to another RFQ: "Everyone knows everything," said Stuart Blumberg, Chairman of the Miami Beach Convention Center Advisory Board, "It would make it difficult."

Lessons learned:  The Miami Beach story illustrates one of the ways that a perception of bias or favoritism can be destructive to the selection process. Advance or inside information can be a significant advantage to a proposer and can be easily transferred to other proposers, making it hard to track while conveying a potential advantage on any proposer who receives such information. As a rule, information about a project should not be released outside the public agency unless and until it is available to all proposers. 

Additional information:
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

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